Operators mount APD legal challenge

Leading tour operators are to mount a legal challenge to the latest hike in Air Passenger Duty which has cost the industry an estimated £50 million.

Members of the Federation of Tour Operators begin a challenge today in the High Court to the government through a Judicial Review of the legality of APD and the way the recent increase in the tax has impacted on operators.

A verdict is expected by the end of the month.

Former Chancellor Gordon Brown announced last December that APD would double from February 1, 2007.

The lack of notice given to operators – just seven weeks – is what has triggered the legal action from leading FTO members.

This lack of adequate notice – always given to the industry in the past – has cost the sector an estimated £50 million, according to the FTO.

Operators work on long lead times and, unlike airlines, are largely precluded by law from passing on surcharges for unexpected new costs to passengers who have already booked.

There are three main strands to the tour operators’ challenge to the government:

• First that it is an illegal tax as it is in breach of Article 15 of the Chicago Convention which effectively says taxes can only be levied on flights if they are in return for cost based services provided – security, air traffic control etc. APD is not related to any such services.
  
• Secondly that it breaches the human rights of tour operators by failing to give sufficient notice of the change, forcing them to absorb substantial unplanned costs.
  
• And lastly that APD is in breach of the Treaty of Rome which enshrines the right to the free movement of goods and services across the EU.

FTO  director general Andy Cooper said: “Our industry is acutely aware of its environmental responsibilities, and is actively leading in a variety of ways to meet the challenges.

“But we will not accept any further post-rationalised ‘greenwashed’ claims for APD to justify this controversial stealth tax increase. APD was not introduced nor intended as an environmental measure and indeed its impact is perverse.

“As a tax levied on passenger numbers, not aircraft, it penalises environmentally friendly airlines with high load factors and rewards those with half empty flights.

“The legal action is primarily directed at the way the Government chose to introduce new APD rates which has forced us to use all means possible to defend the sector from the entirely avoidable consequences.’

by Phil Davies